CALGARY, AB – May 1, 2009 – Oncolytics Biotech Inc. ("Oncolytics") (TSX:ONC; NASDAQ:ONCY) announced today that it has entered into an engagement agreement with Bolder Investment Partners, Inc. ("Bolder") in connection with a proposed equity financing.

The proposed offering will consist of up to three million units at $2.00 per unit, for gross proceeds of up to $6.0 million. Each unit will consist of one common share and one common share purchase warrant. Each common share purchase warrant will entitle the holder thereof to purchase one common share at an exercise price of $2.40 per share for a three year period, subject to an acceleration of the expiry date in certain circumstances.

Bolder will be granted an over-allotment option to purchase up to an additional 450,000 units at the same price as the offering. The over-allotment option will be exercisable on the business day prior to the closing date of the offering.

In connection with the offering and upon the entering into of an underwriting agreement with Bolder, Oncolytics will file in British Columbia, Alberta, Manitoba and Ontario a prospectus supplement to its base shelf prospectus dated June 16, 2008. The offering is expected to close the week of May 11, 2009 and is subject to the receipt of all necessary regulatory and stock exchange approvals.

The net proceeds from this offering will be used by Oncolytics for its clinical trial program, manufacturing activities in support of the clinical trial program and for the company's general corporate purposes.

Oncolytics is a Calgary-based biotechnology company focused on the development of oncolytic viruses as potential cancer therapeutics. Oncolytics’ clinical program includes a variety of Phase I/II and Phase II human trials using REOLYSIN®, its proprietary formulation of the human reovirus, alone and in combination with radiation or chemotherapy. For further information about Oncolytics, please visit www.oncolyticsbiotech.com

This press release contains forward-looking statements. Forward-looking statements, including the Company’s expectations related to the placement of the units, as to progress in the clinical trial program and the Company’s belief as to the potential of REOLYSIN as a cancer therapeutic, involve known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, ability of the Company to complete the offering on the terms set forth in its agreements, the Company’s ability to obtain regulatory approval for the offering, the availability of funds and resources to pursue Research and Development projects, the efficacy of REOLYSIN as a cancer treatment, the success and timely completion of clinical studies and trials, the Company’s ability to successfully commercialize REOLYSIN, uncertainties related to the research and development of pharmaceuticals, uncertainties related to the regulatory process and general changes to the economic environment. Investors should consult the Company’s quarterly and annual filings with the Canadian securities commissions for additional information on risks and uncertainties relating to the forward looking statements. Investors are cautioned against placing undue reliance on forward-looking statements. The Company does not undertake to update these forward-looking statements, except as may be required pursuant to applicable securities laws.

The securities to be issued by Oncolytics have not and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or the securities laws of any state of the United States, and may not be offered or sold in the United States absent registration or an applicable exemption therefrom under the 1933 Act and the securities laws of all applicable states. This press release is not an offer of securities in the United States.Not for distribution to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law.